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[2019] ZAFSHC 250
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Canton Trading 17 (Pty) Ltd v Hattingh NO (1293/2018) [2019] ZAFSHC 250 (10 December 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Appeal
No: 59
/
2019
Case
No: 1293
/
2018
In
the matter between:
CANTON
TRADING 17 (PTY)
LTD
APPELLANT
and
FANTI
BEKKER HATTINGH
N.O.
RESPONDENT
CORAM:
NAIDOO, ADJP et DAFFUE J
et
REINDERS J
JUDGMENT BY:
NAIDOO ADJP
HEARD ON
:
9 SEPTEMBER 2019
DELIVERED ON:
10 DECEMBER 2019
INTRODUCTION
[1]
This is an appeal against the whole of the judgment of the court
a
quo
, which refused the appellant leave to appeal. The
appellant successfully petitioned the Supreme Court of Appeal for
leave to appeal
to the Full Court of this Division. The respondent
initially brought an application in the court
a quo
for an
order in the following terms:
“
(a) That the
Respondent be ordered to submit to arbitration to have the disputes
as set out in the Arbitration Agreement which is
attached to the
Applicant’s founding affidavit as annexure “
B”
adjudicated;
(b) That the Respondent
be ordered to pay the costs of this application”
The
court granted the following order:
“
1. The arbitration
agreement, annexure B to the applicant’s founding affidavit, is
amended by the deletion of the second paragraph
on page 1 thereof as
well as part A and the first sentence of part B on page 3 thereof.
2. The date of 10 March
in paragraph 7.2 thereof is replaced by the date of 19 October 2018.
3. Prayer A of the notice
of motion is granted subject to the amendments in paragraphs 1 and 2
above.
4. The respondent is
ordered to pay the costs of the application, including the costs
occasioned by the employment of senior counsel.”
Adv
GF Heyns appeared for the appellant and Adv P Zietsman SC,
with
Adv R Van Der Merwe appeared for the respondent in this
court.
I will refer to the parties as they appear before us, but for the
sake of clarity, I record that the appellant was the respondent
in
the court below and the respondent was the applicant.
BACKGROUND
[2]
The background to this matter, briefly, is that the respondent is a
trustee of the Qwaha Trust (the Trust) and is cited in that
capacity.
The Trust which conducts its business from Plot 46 and 47
Kwaggafontein, in the Free State, undertook certain expansion
to
buildings on its business premises (the project). For this purpose it
entered into a contract on 5 February 2014 (the JBCC contract),
with
a building contractor called Royal Anthem Investments (the
contractor). The appellant, a firm of architects, was appointed
as
the respondent’s principal agent in respect of the project and
was given fairly wide ranging powers, including the duty
to
supervise and monitor the correctness and quality of the
contractor’s work. The appellant acted as such until the
respondent instructed it to cancel the contract with the contractor,
which the appellant duly did. The respondent alleges that
the
appellant failed to act in accordance with its contractual
obligations to monitor the work of the contractor, causing it to
cancel the contract. A dispute, therefore, arose between the
respondent and the appellant regarding the latter’s performance
in relation to the project, leading to the application in the court
a
quo.
GROUNDS
OF APPEAL
[3]
The court
a quo
set out the facts in this matter in detail and
it is unnecessary for me to repeat same here. The judgment of the
court below was
assailed on the following grounds:
3.1 The court entered the
arena of conflict between the parties;
3.2 The court’s
unwarranted rejection of the appellant’s version;
3.3 The court misdirected
itself in respect of onus, a common-cause dispute of fact and the
outcome of the application.
[4]
The appellant states, in respect of the first ground of appeal, that
the court incorrectly held that the respondent’s
stance was
that the appellant’s version on motion did not create a
bona
fide
dispute, that it stands to be rejected
as palpably untrue, implausible and clearly untenable, and that the
respondent argued that
the court should adopt a robust approach. The
appellant asserts that the correct position in this regard is that
the respondent,
neither in its affidavits nor its heads of argument,
called for a robust approach or rejection of the appellant’s
version.
The respondent’s stance was in fact that the
appellant’s version amounted to a factual dispute which is
capable of
being referred to arbitration for adjudication. The court,
by erroneously finding to the contrary, entered into the arena of
conflict
between the parties. The appellant asserts, in addition,
that the court, in its judgment in the application for leave to
appeal,
erroneously stated that the respondent argued, in the
alternative that the court below should reject the appellant’s
version.
This is factually incorrect, so it is argued, as the
respondent did not argue for the rejection of the appellant’s
version,
but attempted to argue the probabilities.
[5]
In respect of the second ground of appeal, the appellant states that,
even if it is found, on appeal, that the court
a
quo
was entitled to adopt a robust approach,
although neither of the parties advocated such an approach, the court
still erred in rejecting
the appellant’s version. The court
failed to apply the trite legal principle that in motion proceedings
the respondent’s
version can be rejected only if it can be said
that, on the papers, such a version can be rejected as fictitious,
far-fetched and
clearly untenable. The court also did not say why it
found the appellant’s version fictitious, far-fetched and
untenable.
[6]
With regard to the third ground of appeal, the appellant asserts that
the court below erred in criticising/rejecting its denial
that the
parties had the necessary
animus contrahendi
in respect of the (Service Provider) agreement. The appellant asserts
that the respondent bore the onus of proving the presence
of animus
contrahendi, and that, at best, the court should have found that
there was uncertainty about whether there was
animus
contrahendi
on the part of both parties.
[7]
I pause to mention that neither the record of proceedings, relating
to the oral arguments in the court below, nor the Heads
of Argument
relating to proceedings in the court below form part of the appeal
record. However the comments in the judgment of
the court below, and
the assertions by the respondent in its Heads of Argument give some
insight into the nature of the arguments
in the court
a quo
. I
will return to this later.
THE
LAW
[8] Uniform Rule 6 (5)(g)
gives the court a wide discretion to make an appropriate order, the
ultimate aim being to achieve a fair
and expeditious result. It is
well established in our law that where, in opposed motion
proceedings, the court is faced with a
dispute of material facts, it
would usually only grant
a
final order if the facts as stated by the respondent together
with the facts alleged by the applicant that are admitted
by the
respondent, justify such an order
.
A bare denial by the
respondent of the allegations in the applicant’s affidavits
will not generally be sufficient to generate
a genuine or real
dispute of fact.
It
is permissible and in fact advocated that courts must take a robust,
common-sense approach to a dispute on motion and not hesitate
to
decide an issue on affidavit merely because it may be difficult to do
so.
If
the court is satisfied as to the inherent credibility of the
applicant’s factual averments, it may proceed on the basis
of
the correctness thereof and include this fact among those upon which
it determines whether the applicant is entitled to the
final relief
sought. [See
Erasmus
Superior Court Practice D1-69 and D1-70 and the cases
cited therein
].
[9]
The
Arbitration Act 42 of 1965
defines an arbitration agreement as
“
a
written agreement providing for the reference to arbitration of any
existing dispute or any future dispute relating to a matter
specified
in the agreement, whether an arbitrator is named or designated
therein or not”
The
interpretation of this clause gave rise to the dispute between the
parties. I will deal more fully with this aspect later.
[10]
Both parties referred to a number of decisions in support of their
various contentions. One such case pertinent to this matter
is that
of
Motswai v RAF 2014(6) SA 360 at para 59,
where the relevant
portion of the court’s dictum reads as follows:
“
Through
the authority vested in the courts by s 165(1) of the Constitution
judges wield tremendous power. Their findings often have
serious
repercussions for the persons affected by them. They may vindicate
those who have been wronged but they may condemn others. Their
judgments may destroy the livelihoods and reputations of those
against whom they are directed. It is therefore a power that must
be
exercised judicially and within the parameters prescribed by law”.
This
was said in the context of a finding of fraud by a judge on the part
of the attorney for the plaintiff, without holding a proper
enquiry
into the matter before making such a finding
.
The
parties in this matter relied on this dictum for their different
contentions. This too, will be dealt with later.
[11]
In the case of
Trencon Construction (Pty) Ltd v Industrial
Development Corporation of South Africa Ltd
2015 (5) SA 245
(CC)
,
the court dealt with the ability of an appellate court to interfere
with the decision of a lower court. It is perhaps useful to
set out
the relevant paragraphs of the judgment in order contextualise this
court’s powers in the current matter:
[83]
In order to decipher the standard of interference that an appellate
court is justified in applying, a distinction between two
types of
discretion emerged in our case law. That distinction is now deeply
rooted in the law governing the relationship between
appeal courts
and courts of first instance. Therefore, the proper approach on
appeal is for an appellate court to ascertain
whether the
discretion exercised by the lower court was a discretion in the true
sense or whether it was a discretion in the loose
sense. The
importance of the distinction is that either type of discretion will
dictate the standard of interference that an appellate
court must
apply.
[85]
A discretion in the true sense is found where the lower court has a
wide range of equally permissible options available to
it. This type
of discretion has been found by this court in many instances,
including matters of costs, damages and in
the award of a remedy
in terms of s 35 of the Restitution of Land Rights Act. It is
'true' in that the lower court has
an election of which option
it will apply and any option can never be said to be wrong as each is
entirely permissible.
[86]
In contrast, where a court has a discretion in the loose sense, it
does not necessarily have a choice between equally permissible
options…
[87]
… An appellate court must heed the standard of interference
applicable to either of the discretions. In the instance
of a
discretion in the loose sense, an appellate court is equally capable
of determining the matter in the same manner as the court
of first
instance and can therefore substitute its own exercise of the
discretion without first having to find that the court of
first
instance did not act judicially. However, even where a discretion in
the loose sense is conferred on a lower court, an appellate
court's
power to interfere may be curtailed by broader policy considerations.
Therefore, whenever an appellate court interferes
with a discretion
in the loose sense, it must be guarded.
[88]
When a lower court exercises a discretion in the true sense, it would
ordinarily be inappropriate for an appellate court to
interfere
unless it is satisfied that this discretion was not exercised —
'judicially,
or that it had been influenced by wrong principles or a misdirection
on the facts, or that it had reached a decision
which in the result
could not reasonably have been made by a court properly directing
itself to all the relevant facts and
principles'
(Referring
to National Coalition for Gay and Lesbian Equality and Others v
Minister of Home Affairs 2000(2) SA 1 (CC). All
other case references
and footnotes have been omitted).
EVALUATION
[12]
In its judgement the court
a quo
comments that “
Initially the applicant
sought an order compelling arbitration, including the question
whether an arbitration agreement came into
being. When the matter was
argued however, it became clear and common cause that that issue
should be decided by this court.”
The
appellant’s denial that an agreement was concluded by the
parties, created a
bona fide
factual dispute, so it argued. The respondent clarified this in his
Heads of Argument. The respondent points out that it was, in
fact,
the appellant who requested the court to consider its version with a
view to establishing whether a factual dispute existed
or not. The
respondent, in reply, then argued that the dispute raised by the
appellant did not create a
bona fide
dispute of fact, and requested the court to adopt a robust
common-sense approach in deciding the issue.
[13]
It is trite that where a court, in motion proceedings, is faced with
a factual dispute, it is required to exercise its discretion
to
determine if there is in fact a genuine and
bona
fide
dispute of fact. In the present matter,
the court dealt extensively with the appellant’s version as it
emerged from the papers.
The appellant in its papers was at great
pains to point out and base its case on the allegation that the court
below
meru motu
decided that it would decide whether there was a genuine dispute of
fact or not, in spite of the respondent’s very clear
stance
that all it sought was an order compelling the appellant to submit to
arbitration. The appellant made no mention that it
was its counsel
who requested the court below to consider whether there was in fact a
bona fide dispute of fact. The appellant
specifically denied the
correctness of the statement in the judgment that respondent argued
that the appellant’s version
should be rejected. As I indicated
the respondent confirmed that he did in fact do so, in reply to the
appellant’s request
that the court consider the question of the
factual dispute.
[14]
In any event, where a party relies on the provisions of Rule 6(5)(g),
as the appellant seems to have done, it is common sense,
that the
court is called upon to examine the very dispute in order to
determine whether it creates a genuine dispute of fact or
not. The
argument that the court entered the arena of conflict under such
circumstances is misguided and unsustainable. The respondent
also
confirms that in requesting the court to reject the appellant’s
version, it also requested the court to adopt a robust
common-sense
approach. This accords with the statement of the court, which I
alluded to above, and is evidenced by the court’s
subsequent
approach to the evidence in this matter. What is clear is that the
court determined whether the appellant’s version
regarding the
coming into existence of the agreement was true and credible. It
found that such version was not, and as such was
entitled to reject
such version.
[15]
At paragraph 54 of the judgment of the court below, the court records
that the appellant conceded that a signed agreement was
not a
prerequisite for a written document to have binding effect. This
concession was properly made, as it is evident from the
provisions of
the
Arbitration Act that
it does not call for a written agreement to
be signed in order for it to be valid and binding. The court
undertook an extensive
examination of the respective versions of the
parties as they appear in the papers and found that the appellant’s
denial
of the existence of an agreement was palpably untrue and not
worthy of credence, warranting the rejection of its version. I am
unable to fault the reasoning or the conclusion of the court in this
respect.
[16]
I align myself with the reasoning and dicta of the court in
Trencon
,
regarding the relationship between an appeal court and a court of
first instance. In the present case the court had a variety
of
equally permissible options with regard to the order it should make.
It elected to deal with the dispute and pronounce upon
the veracity
of the dispute and whether it created a genuine dispute of fact. It
was entirely permissible for the court
a quo
to have done so, and it cannot be held that it was wrong to have done
so, unless the court did not exercise its discretion
'judicially,
or that it had been influenced by wrong principles or a misdirection
on the facts, or that it had reached a decision
which in the result
could not reasonably have been made by a court properly directing
itself to all the relevant facts and
principles'.
As
I indicated,
I
am unable to find any such misdirection on the facts or the
applicable legal principles in the present case. The power of this
court to interfere in the judgment and order of the court
a
quo
is therefore
limited and, in my view, inappropriate.
[17]
Having dealt with and having found, permissibly so, that there was no
genuine dispute of fact regarding whether the agreement
between the
parties came into existence, the court
a quo
was then entitled to refer the dispute regarding the performance of
the appellant in terms of the Service Provider Agreement to
arbitration. The Supreme Court of Appeal (SCA) dealt with the issue
of referral to arbitration of disputes between contracting
parties in
North East Finance (Pty) Ltd v Standard Bank
of South Africa (Pty) Ltd
2013 (5) SA 1
(SCA)
and in
Zhongji Development Construction
Engineering Co Ltd v Kamoto Copper Co Sarl
2015 (1) SA 345
(SCA).
In
both cases the SCA referred to English case law. In North East
Finance, certain general principles emerged regarding the existence
of a dispute between contracting parties as to whether there was
agreement to refer to arbitration, specific disputes, including
whether they were bound by the arbitration clause in such agreement.
The court in the North East case referred to the English case
of
Heyman v Darwin
[1942]
AC 356
(HL) ([1942]
1 All ER 337):
dictum at 357B – D, where
the English court held as follows:
“
I
think it essential to remember that the question whether a given
dispute comes within the provisions of an arbitration clause
or not
primarily depends upon the terms of the clause itself. If two parties
purport to enter into a contract and a dispute arises
as to whether
they have done so or not, or as to whether the alleged contract
is binding upon them, I see no reason why they
should not submit that
dispute to arbitration. Equally, I see no reason why, if at the time
when they purport to make the contract
they
foresee the possibility of such a dispute arising
,
they should not provide in the contract itself for the submission to
arbitration of a dispute as to whether the contract ever
bound them
or continues to do so”.
[18]
The court in North East also referred to the English case of
Fiona
Trust & Holding Corporation and Others v Privalov and
Others
[2007]
UKHL 40
([2007]
4 All ER 951
(HL)).
The
general principle is thus that where a dispute exists regarding the
obligation to submit to arbitration, the agreement itself
will
determine which disputes the parties intended to refer to
arbitration. The appellant alleged that the agreement between the
parties did not come into existence by virtue of it not having been
signed by either party, not that it was void or invalid for
whatever
reason. The court therefore, had the discretion to determine the
dispute itself and exercised such discretion.
[19]
With regard to the third ground of appeal, the court
a
quo
dealt with the evidence presented by both
parties, and determined that the appellant’s denial of
animus
contrahendi
was not true or tenable, in that
it made the bald allegation without presenting anything further to
substantiate that allegation.
The respondent on the other hand, was
able to show that there was a written Service Provider Agreement
presented to it by the appellant’s
attorney, that this was done
after the signing of the JBCC agreement in terms of which the
appellant was appointed as the respondent’s
principal agent. It
was also common cause that the appellant acted as such in terms of
the JBCC agreement. The respondent was able
to show that the parties
acted in accordance with the arbitration clause in the Service
Provider Agreement, and that the respondent’s
attorney was even
requested by the appellant’s attorney to draft the
pre-arbitration agreement. The dispute arose only after
the
pre-arbitration meeting, and it seems that the court
a
quo
considered this to be a contrived and
opportunistic dispute, and rejected it accordingly. I cannot fault
the reasoning of the court
below in accepting (although it did not
say so in such words) that the respondent had proved the terms of
contract and that the
parties had acted in accordance with such
contract.
[20]
I return to the case of Motswai
supra
.
The appellant’s reliance on this case is to support its view
that the court
a quo
did not exercise its discretion “
judicially
and within the parameters prescribed by law”.
The
respondent, on the other hand, relied on Motswai to support his
argument that the court acted “
within
the parameters prescribed by law”.
As
indicated earlier, my view is that the court
a
quo
, acting in terms of
Rule 6(5)(g)
,
reasoned the matter correctly, and exercised one of the permissible
options that it was allowed in terms of the applicable law.
The court
thus acted within the parameters prescribed by law.
[21]
I am therefore, of the view that the appellant has not made out a
case for the relief it seeks. With regard to costs, the respondent
seeks costs of two counsel. I am in agreement with the view of the
court
a quo
that
neither the complexity nor the importance for the parties warrants
the cost of two counsel.
[22]
In the circumstances I make the following orders:
22.1 The appeal is
dismissed with costs.
22.2 The order of the
court
a quo
is confirmed, save that the date of 19 October
2018 in paragraph 2 thereof is amended to read 10 January 2020.
22.3 The appellant is
ordered to pay the costs of the appeal, including the costs
occasioned by the employment of senior counsel.
_______________
NAIDOO
ADJP
I
concur
_______________
DAFFUE
J
I
concur
_______________
REINDERS
J
On
behalf of Appellant: Adv GF Heyns (Pretoria)
Instructed
by: VDT Attorneys
c/o
Honey Attorney
Honey
Chambers
Northridge
Mall
Kenneth
Kaunda Road
Bloemfontein
(A
De Jager/M04210)
On
behalf of Respondent: Adv P Zietsman SC with
Adv
R Van Der Merwe
Instructed
by: Lovius Block
31
First Avenue
Westdene
Bloemfontein
(Ref:
C13028*PDY/mn/AD400/18)